How Iran's president is being undercut

But inside Iran, the NIE may have a negative effect. The silver lining of the report may well be the weakening of Mr. Ahmadinejad and his politics of defiance. The president might celebrate the report's findings as a victory for Iran, but he can not take credit for it. Nor will it in all likelihood favor him in his ongoing tug-of-war with political rivals. It is not Ahmadinejad's hard-line rhetoric and uncompromising posture in negotiations that are to credit for the change in Iran's fortunes. Rather, they come from a decision to halt the nuclear weapons program that Supreme Leader Ayatollah Ali Khamenei blessed in 2003, when reformists were in charge.

With war no longer imminent, the supreme leader may see less value in Ahmadinejad's confrontational politics. And he, not the president, has the last word in foreign policy matters.

Parliamentary elections are scheduled for March. Much rides on the outcome. It can either give Ahmadinejad momentum going into the presidential elections in 2009 or turn him into a lame duck. His international grandstanding not withstanding, Ahmadinejad's presidency is in trouble. His faction lost in the December 2006 elections for municipal councils and the Council of Experts that will choose the supreme leader's successor. Since then, popular discontent with his administration has continued to grow. This week, former president Mohammad Khatami publicly criticized the president at the prominent Tehran University, whose students protested Ahmadinejad in September. In a recent poll, two-thirds of those who had voted for him in 2005 indicated that they will not vote for him again.

Ahmadinejad's populist rhetoric and confrontational style are popular in some quarters in Iran, but they do not override the growing disaffection with political suppression and economic mismanagement. While the climate of fear has not sat well with voters, Ahmadinejad has even more to worry about from the fallout of Iran's faltering economy. With oil at more than $90 a barrel, Iranian financial reserves look good. But the Iranian economy is struggling: Capital markets are in shambles, investment at rock bottom, and flight of capital an ongoing concern.

Meanwhile, populist policies have raised inflation, impoverishing the middle class without doing much for the poor. Noisy labor unrest has become more frequent across the country, and there has been worry over a spike in crime.